The death of a loved one is always difficult. For spouses and family members of deceased veterans with VA home loans, the grief of loss is compounded by uncertainty around the mortgage and home. What happens to a VA loan when a veteran passes away? Can you take over the payments? Do you have to move out? This guide will explain how to assume a VA mortgage after the death of the veteran borrower
Can a Surviving Spouse Take Over the VA Mortgage?
In many cases the simplest solution is for the veteran’s surviving spouse to formally assume the VA home loan. Unlike a private mortgage, the Department of Veterans Affairs does not require lender approval for a surviving spouse to take over VA loan payments.
Key Facts on Surviving Spouse VA Loan Assumption
- The surviving spouse contacts the servicer to assume financial responsibility for the VA mortgage.
- They begin making the monthly payments in place of the deceased veteran.
- No credit check or underwriting is required by the lender for this process.
- Surviving spouses are not charged an assumption fee.
- Entitlement and eligibility stay with the original veteran borrower.
This administrative process allows the surviving spouse to stay in the home and take over the mortgage seamlessly. As long as payments are made on time, the holder of the loan sees no change except a different name on the payment checks.
Can Other Heirs Assume a VA Mortgage?
If there is no surviving spouse, or the spouse does not want to remain in the home, other heirs may be able to formally assume the VA loan. This includes:
- Adult children
- Other relatives
- Non-relative beneficiaries
The process is similar to a surviving spouse assumption, but these new owners will need to go through underwriting and obtain VA approval.
Here’s how VA loan assumption works for non-spouse heirs and beneficiaries:
- Apply for Assumption: The assumer applies and is evaluated for creditworthiness.
- Funding Fee Charged: A 0.5% funding fee based on the loan balance must be paid.
- New VA Entitlement: The assumer must have their own VA loan eligibility and entitlement.
- No Seasoning Requirement: Assumptions can happen for any VA loan, old or new.
If approved, the new borrower would be liable for the mortgage and could remain in the home. This allows non-spouse heirs to obtain the property even if they don’t qualify for a traditional purchase loan.
Alternatives if the Loan is Unaffordable
In some unfortunate cases, surviving family members want to keep the veteran’s home but cannot afford the monthly VA mortgage payments. Here are three options to consider if assuming the loan is financially out of reach:
VA Loan Refinancing
- Surviving spouses can utilize an Interest Rate Reduction Refinance Loan (IRRRL) to lower payments.
- This VA streamline refi requires no appraisal or credit check.
- The interest rate and term can be adjusted to achieve an affordable payment.
Forbearance
- Temporary hardship programs are available if short on funds now but expect improved finances later.
- VA mortgage forbearance allows borrowers to pause or reduce payments for up to 12 months.
- No late fees are charged during the forbearance period.
Selling the Home
- If keeping the home long-term is not feasible, sale proceeds can pay off the VA loan balance.
- Consider timing the sale based on current home values and market conditions in the area.
- Investing sale proceeds according to the Veteran’s wishes is a great way to honor their legacy.
Get VA Guidance for a Smooth Transition
Losing a veteran spouse or family member is an enormously difficult experience. Taking on their VA home loan can seem overwhelming.Lean on the VA lender’s expertise and guidance during this challenging transition. They have processes in place to facilitate easy assumption by eligible surviving spouses and heirs. With their support, you can honor your loved one’s service by keeping their home in the family.
Frequency of Entities:
Assume the loan: 5
https://www.veteransunited.com/valoans/va-loans-after-death/: 1
https://www.benefits.va.gov/HOMELOANS/documents/circulars/26-23-10.pdf: 1
Q: What is acceptable proof of military service?
A: If you are still serving on regular active duty, you must include an original statement of service signed by, or by direction of, the adjutant, personnel officer, or commander of your unit or higher headquarters which identifies you and your social security number, and provides your date of entry on your current active duty period and the duration of any time lost. If you were discharged from regular active duty after January 1, 1950, a copy of DD Form 214, Certificate of Release or Discharge From Active Duty should be included with your VA Form 26-1880. If you were discharged after October 1, 1979, DD Form 214 copy 4 should be included. A PHOTOCOPY OF DD214 WILL SUFFICE…..DO NOT SUBMIT AN ORIGINAL DOCUMENT.
If you are still serving on regular active duty, you must include an original statement of service signed by, or by direction of, the adjutant, personnel officer, or commander of your unit or higher headquarters which shows your date of entry on your current active duty period and the duration of any time lost.
If you were discharged from the Selected Reserves or the National Guard, you must include copies of adequate documentation of at least 6 years of honorable service. If you were discharged from the Army or Air Force National Guard, you may submit NGB Form 22, Report of Separation and Record of Service, or NGB Form 23, Retirement Points Accounting, or its equivalent. If you were discharged from the Selected Reserve, you may submit a copy of your latest annual points statement and evidence of honorable service. Unfortunately, there is no single form used by the Reserves or National Guard similar to the DD Form 214. It is your responsibility to furnish adequate documentation of at least 6 years of honorable service.
If you are still serving in the Selected Reserves or the National Guard, you must include an original statement of service signed by, or by the direction of, the adjutant, personnel officer, or commander of your unit or higher headquarters showing the length of time that you have been a member of the Selected Reserves. Again, at least 6 years of honorable service must be documented.
Q: How do I apply for a VA guaranteed loan?
A: You can apply for a VA loan with any mortgage lender that participates in the VA home loan program. At some point, you will need to get a Certificate of Eligibility from VA to prove to the lender that you are eligible for a VA loan.
Loan Assumption – What You Need To Know Before Assuming a Loan
FAQ
Can a VA loan be assumed after death?
Can a VA loan be assumed by a family member?
Can you inherit a house with a VA loan?
How to assume a mortgage after death?
Can a veteran take over a VA loan?
With a VA loan assumption, you are inheriting a Veteran’s active mortgage. You don’t have to be a Veteran to assume a VA loan, although there are some risks involved for Veteran homeowners who allow civilians to take over their mortgage (more on that later). Loan assumptions and traditional home purchases differ in some fundamental ways.
What happens if a surviving spouse dies on a VA loan?
When a **surviving spouse** who was part of a **VA loan** passes away, there are important considerations regarding the loan: 1.**VA Loan Guaranty**: Contrary to a common misconception, the **VA** does
Can you refinance a VA home loan if you die?
The death of a family member can be difficult to deal with emotionally as well as financially. In some cases, it can become difficult for the family to pay back a Veteran’s home loan. If this is the case, refinancing can be a good option. The VA allows beneficiaries to refinance loans.
Can a VA loan be assumed if you’re a veteran?
Yes, VA loans can be assumed regardless of whether you’re a Veteran. But there’s risk involved for VA homeowners who allow for assumptions to civilians. Now let’s take a look at some of the challenges of a VA loan assumption.